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Common Small Business Start-Up Costs

When considering whether or not to start a small business you need to first determine if your business idea is financially possible. One of the first things to consider when making this determination is how much will it cost to start your business.

Office Space:

If you will not be working from home you will need to find whatever space fits your specific business’ needs weather you need office space, a store front, or a warehouse there will be costs associated with buying or renting the space. When renting, many landlords require your first and last month’s rent in advance. Some may even require you to provide additional security deposit. In many instances part the security deposit may be refunded upon completion of the rental term. You should also take into consideration if the space that you are acquiring will require improvements and how much these improvements will cost.

Equipment and Supplies:

Depending on the type of business that you are starting will determine the equipment and supplies that you will need to purchase. Most business will require at least a desk, chair, lamp, filing cabinet, printer, scanner, fax machine, copier, and a computer.

You can lease your equipment, search out used machinery or buy all of it new.  If you plan to lease, you may need to put down a security deposit.


This includes the costs associated with setting up internet and telephone accounts. This may require the first and last month’s payment up front.


Once you have a location for your business, you will have to think about heating, electricity, water and garbage. Many utility companies require a connection fee and security deposit.

Licenses and permits:

All businesses are liable for local, state and federal licenses and permits. Many of these licenses and permits have fees associated with acquiring them.


Start by investigating the types of insurance that would be most useful for your particular business. Many owners have liability and property insurance, but other possibilities include business vehicle and workers’ compensation insurance. Starting these policies may require an initial premium deposit.


If your business will require contracts to be drawn up or you will need to have a lawyer on retainer, you will need to factor these fees into your start-up expenses.

Initial Inventory:

This is likely to be one of the most substantial costs faced by a start-up. Retail enterprises need initial stock before they can begin doing business, while manufacturers should make sure they have access to a sufficient amount of raw materials to keep pace with orders.

Advertising and Marketing:

Small businesses, especially ones that are start-ups will require a great deal of marketing to let potential customers know that you are there and what products and services you are offering.  You may want to invest in some sort of grand opening marketing campaign to accomplish this goal.


Almost every business, even brick-and-mortar businesses, benefit from an online presence these days. Associated costs may include website design, web-hosting fees, implementing ecommerce software, registering a domain name and setting up a merchant account.

Cash On Hand:

Cash on hand is money that you need to budget for in your start-up business. It is money that is used to pay your bills before the business is profitable to sustain itself.

If you plan ahead and determine your initial costs, you should not encounter unexpected expenses. Click here to view our small business start-up ideas

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